The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from Business Wire

Westfield Financial, Inc. Reports Results for the Quarter Ended June 30, 2011 and Declares Regular Dividend

Wednesday, July 27, 2011

Westfield Financial, Inc. Reports Results for the Quarter Ended June 30, 2011 and Declares Regular Dividend10:52 EDT Wednesday, July 27, 2011 WESTFIELD, Mass. (Business Wire) -- Westfield Financial, Inc. (the “Company”) (NASDAQ:WFD), the holding company for Westfield Bank (the “Bank”), reported net income of $1.6 million, or $0.06 per diluted share, for the quarter ended June 30, 2011, compared to net loss of $(386,000), or $(0.01) per diluted share, for the same period in 2010. For the six months ended June 30, 2011, net income was $2.9 million, or $0.11 per diluted share, compared to $1.0 million, or $0.03 per diluted share, for the same period in 2010. The increase in earnings was mainly the result of a $3.9 million decrease in the provision for loan losses to $175,000 for the three months ended June 30, 2011, compared to $4.1 million for the same period in 2010. The provision for loan losses decreased $4.1 million to $514,000 for the six months ended June 30, 2011, compared to $4.6 million in the same period in 2010. The decreases in the provision for loan losses occurred because the 2010 periods included the reserve for and subsequent charge-off of $3.6 million on a single commercial real estate loan. Net interest income increased $305,000 to $7.7 million for the three months ended June 30, 2011, compared to $7.4 million for the same period in 2010. The net interest margin, on a tax-equivalent basis, was 2.75% for the three months ended June 30, 2011, compared to 2.70% for the same period in 2010. For the six months ended June 30, 2011, net interest income increased $260,000 to $15.4 million, compared to $15.1 million for the same period in 2010. The net interest margin, on a tax-equivalent basis, was 2.73% and 2.79% for the six months ended June 30, 2011 and 2010, respectively. Net interest income was favorably impacted by an increase in loans, which generally have higher yields than investments, along with a decrease in the cost of funds due to the lower interest rate environment. Noninterest income decreased $1.1 million to $947,000 for the three months ended June 30, 2011, compared to $2.0 million for the same period in 2010. For the six months ended June 30, 2010, noninterest income decreased $1.2 million to $1.8 million, compared to $3.0 million for the same period in 2010. The decrease was primarily the result of a decrease in net gains on the sale of securities of $1.1 million and $1.2 million for the three and six months ended June 30, 2011 and 2010, respectively. For the three months ended June 30, 2011, noninterest expense increased $493,000 to $6.4 million, compared to $5.9 million for the same period in 2010. For the six months ended June 30, 2011, noninterest expense increased $638,000 to $13.0 million, compared to $12.3 million for the same period in 2010. Salaries and benefits increased $308,000 for the three months ended June 30, 2011 and $445,000 for the six months ended June 30, 2011, compared to the same periods in 2010, primarily due to normal salary increases. Balance Sheet Growth Total assets were $1.2 billion at June 30, 2011, showing an increase of $1.2 million, compared to December 31, 2010. Securities decreased $34.8 million to $619.9 million at June 30, 2011 from $654.7 million at December 31, 2010. The decrease in securities was the result of using cash flow from investment securities to fund the loan portfolio as discussed below. Net loans increased by $33.9 million to $536.3 million at June 30, 2011 from $502.4 million at December 31, 2010. Residential loans increased $34.0 million to $182.8 million at June 30, 2011 from $148.8 million at December 31, 2010. Through the Company's long standing relationship with a third-party mortgage company, it originated and purchased residential loans within and contiguous to its market area as a means of diversifying its loan portfolio and improving net interest income. In addition, commercial and industrial loans increased $3.0 million to $138.3 million at June 30, 2011 from $135.3 million at December 31, 2010. Commercial real estate loans decreased $2.9 million to $218.7 million at June 30, 2011 from $221.6 at December 31, 2010. Total deposits increased $10.8 million to $711.1 million at June 30, 2011 from $700.3 million at December 31, 2010. The increase in deposits was due to an increase in checking accounts of $11.9 million to $180.6 million, and an increase in savings and money market accounts of $21.8 million to $199.3 million. The increases in checking, savings and money market accounts were primarily due to a relationship-based product set introduced in 2010 which continues to show growth in 2011. Time deposit accounts decreased $22.8 million to $331.2 million at June 30, 2011, as customers have less incentive to lock up funds in time deposits because of the low interest rate environment. Shareholders' equity at June 30, 2011 and December 31, 2010 was $221.0 million and $221.2 million, respectively, which represented 17.8% of total assets at both dates. The decrease in shareholders' equity reflects the payment of regular and special dividends amounting to $7.2 million and the repurchase of 330,394 shares of our common stock at a cost of $2.8 million, pursuant to the Company's current stock repurchase plan. This was partially offset by an increase in other comprehensive income of $5.4 million primarily due to the change in market value of securities, increase of $1.5 million related to the recognition of share-based compensation and the exercise of 34,646 stock options, and net income of $2.9 million for the six months ended June 30, 2011. On May 25, 2010, the Board of Directors authorized the commencement of a second stock repurchase program, authorizing the repurchase of up to 2,924,367 shares, or ten percent of the Company's outstanding shares of common stock. There were 1,702,245 shares purchased under the second repurchase program as of June 30, 2011. Credit Quality The allowance for loan losses was $7.1 million at June 30, 2011 and $6.9 million at December 31, 2010. This represents 1.30% and 1.36% of total loans at June 30, 2011 and December 31, 2010, respectively, and 261% and 216% of nonperforming loans at June 30, 2011 and December 31, 2010, respectively. An analysis of the changes in the allowance for loan losses is as follows:   Three Months Ended June 30,2011   March 31,2011   June 30,2010 (In thousands) Balance, beginning of period $ 6,999 $ 6,934 $ 7,551 Provision 175 339 4,120 Charge-offs (256 ) (359 ) (3,861 ) Recoveries   155     85     17   Balance, end of period $ 7,073   $ 6,999   $ 7,827     Nonperforming loans decreased $500,000 to $2.7 million at June 30, 2011, compared to $3.2 million at December 31, 2010, representing 0.50% and 0.63% of total loans at June 30, 2011 and December 31, 2010, respectively. At June 30, 2011, nonperforming loans were primarily made up of three commercial relationships totaling $2.0 million. There are no loans 90 or more days past due and still accruing interest. Loans delinquent 30 – 89 days decreased $1.3 million to $15.5 million at June 30, 2011 from $16.8 million at December 31, 2010. The delinquent loans are primarily comprised of a $14.0 million single commercial real estate relationship in the hotel and lodging industry. The decrease in loans delinquent is mainly the result of a $1.0 million loan belonging to this hotel relationship that was brought current as of June 30, 2011. Management will continue to closely monitor this relationship. Additionally, loans delinquent 30 – 89 days decreased $5.1 million at June 30, 2011 from $20.6 million at March 31, 2011. The decrease is primarily due to a single commercial and industrial relationship of $3.8 million involved in timber clearing, which became delinquent in the quarter ended March 31, 2011 and was brought current as of June 30, 2011. Declaration of Dividends James C. Hagan, Chief Executive Officer stated, “On July 26, 2011, the Board of Directors declared a regular cash dividend of $0.06 per share payable on August 24, 2011 to all shareholders of record on August 10, 2011.” About Westfield Bank The Bank is headquartered in Westfield, Massachusetts and operates through 11 banking offices in Agawam, East Longmeadow, Feeding Hills, Holyoke, Southwick, Springfield, West Springfield and Westfield, Massachusetts. The Bank's deposits are insured by the Federal Deposit Insurance Corporation. Forward-Looking StatementsThe Company wishes to caution readers not to place undue reliance on any such forward-looking statements contained in this press release, which speak only as of the date made. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010 and in subsequent filings with the Securities and Exchange Commission.In addition, the forward-looking statements included in this press release represent our views as of the date of this release. The Company and the Bank do not undertake and specifically decline any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.     WESTFIELD FINANCIAL, INC. AND SUBSIDIARIESConsolidated Statements of Operations and Other Data(Dollars in thousands, except per share data)(Unaudited)   Three Months EndedJune 30,Six Months EndedJune 30,     2011   20102011   2010 INTEREST AND DIVIDEND INCOME: Loans $ 6,312 $ 6,132 $ 12,478 $ 12,298 Securities 5,119 5,454 10,395 11,237 Other Investments - at cost 18 7 32 12 Federal funds sold, interest-bearing deposits and othershort-term investments   -     2     1     3   Total interest and dividend income   11,449     11,595     22,906     23,550     INTEREST EXPENSE: Deposits 1,975 2,495 4,081 5,109 Long-term debt 1,710 1,600 3,355 3,186 Short-term borrowings   35     76     94     139   Total interest expense   3,720     4,171     7,530     8,434     Net interest and dividend income 7,729 7,424 15,376 15,116   PROVISION FOR LOAN LOSSES   175     4,120     514     4,620     Net interest and dividend income after provision for loanlosses   7,554     3,304     14,862     10,496     NONINTEREST INCOME: Total other-than-temporary impairment losses onsecurities (433 ) - (465 ) (1,071 ) Portion of other-than-temporary impairment lossesrecognized in accumulated other comprehensive loss   425     -     425     971   Net other-than-temporary impairment losses recognizedin income (8 ) - (40 ) (100 ) Service charges and fees 521 492 962 984 Income from bank-owned life insurance 388 385 753 760 Gain on sales of securities, net 46 1,132 77 1,317 Gain (loss) on sale of other real estate owned   -     (6 )   -     1   Total noninterest income   947     2,003     1,752     2,962     NONINTEREST EXPENSE: Salaries and employees benefits 3,759 3,451 7,713 7,268 Occupancy 657 636 1,335 1,296 Data processing 478 497 965 982 Professional fees 563 443 1,001 867 FDIC insurance 140 168 348 332 OREO expense 13 21 20 264 Other   823     724     1,591     1,326   Total noninterest expense   6,433     5,940     12,973     12,335     INCOME (LOSS) BEFORE INCOME TAXES 2,068 (633 ) 3,641 1,123   INCOME TAX PROVISION (BENEFIT)   503     (247 )   790     155   NET INCOME (LOSS) $ 1,565   $ (386 ) $ 2,851   $ 968     Basic earnings per share $ 0.06 $ (0.01 ) $ 0.11 $ 0.03   Weighted average shares outstanding 26,639,247 27,970,840 26,692,379 28,078,326   Diluted earnings per share $ 0.06 $ (0.01 ) $ 0.11 $ 0.03   Weighted average diluted shares outstanding 26,755,667 29,970,840 26,815,160 28,334,136   Other Data:   Return on average assets (1) 0.51 % -0.13 % 0.46 % 0.16 %   Return on average equity (1) 2.89 % -0.64 % 2.63 % 0.80 %   (1) Results have been annualized.       WESTFIELD FINANCIAL, INC. AND SUBSIDIARIESConsolidated Balance Sheets and Other Data(Dollars in thousands, except per share data)(Unaudited)   June 30,2011December 31,2010 Cash and cash equivalents $ 13,838 $ 11,611 Securities available for sale, at fair value 607,465 642,467 Federal Home Loan Bank of Boston and other restricted stock - at cost 12,438 12,282   Loans 543,417 509,326 Allowance for loan losses   7,073     6,934   Net loans 536,344 502,392   Bank-owned life insurance 43,247 40,494 Other real estate owned 1,353 223 Other assets   25,999     30,020     TOTAL ASSETS $ 1,240,684   $ 1,239,489     Total deposits $ 711,091 $ 700,335 Short-term borrowings 49,169 62,937 Long-term debt 250,310 238,151 Securities pending settlement 44 7,791 Other liabilities   9,071     9,030     TOTAL LIABILITIES 1,019,685 1,018,244   TOTAL SHAREHOLDERS' EQUITY   220,999     221,245     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,240,684   $ 1,239,489     Book value per share $ 7.93 $ 7.85   Other Data:   30- 89 day delinquent loans $ 15,484 $ 16,785   Nonperforming loans 2,705 3,204   Nonperforming loans as a percentage of total loans 0.50 % 0.63 %   Nonperforming assets as a percentage of total assets 0.33 % 0.28 %   Allowance for loan losses as a percentage of nonperforming loans 261.48 % 216.42 %   Allowance for loan losses as a percentage of total loans 1.30 % 1.36 %   The following tables set forth the information relating to our average balance at, and net interest income for, the three and six months ended June 30, 2011 and 2010, and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.   Three Months Ended June 30,2011   2010Average     Avg Yield/Average     Avg Yield/BalanceInterestCostBalanceInterestCost (Dollars in thousands) ASSETS:Interest-earning assets Loans(1)(2) $ 533,411 $ 6,351 4.76 % $ 471,510 $ 6,166 5.23 % Securities(2) 619,414 5,297 3.42 629,633 5,595 3.55 Other investments - at cost 14,016 18 0.51 12,708 7 0.22 Short-term investments(3)   6,644   -   0.00   14,018   2   0.06 Total interest-earning assets 1,173,485   11,666   3.98 1,127,869   11,770   4.17 Total noninterest-earning assets   72,293   79,267   Total assets $ 1,245,778 $ 1,207,136   LIABILITIES AND EQUITY:Interest-bearing liabilities NOW accounts $ 91,394 231 1.01 $ 73,813 227 1.23 Savings accounts 108,069 158 0.58 117,805 225 0.76 Money market accounts 86,277 148 0.69 48,494 89 0.73 Time certificates of deposit   335,196   1,438   1.72   343,344   1,954   2.28 Total interest-bearing deposits 620,936 1,975 583,456 2,495 Short-term borrowings and long-term debt   307,386   1,745   2.27   289,158   1,676   2.32 Interest-bearing liabilities   928,322   3,720   1.60   872,614   4,171   1.91 Noninterest-bearing deposits 87,628 83,015 Other noninterest-bearing liabilities   9,841   8,918 Total noninterest-bearing liabilities   97,469   91,933   Total liabilities 1,025,791 964,547 Total equity   219,987   242,589 Total liabilities and equity $ 1,245,778 $ 1,207,136 Less: Tax-equivalent adjustment(2)   (217 )   (175 ) Net interest and dividend income $ 7,729   $ 7,424   Net interest rate spread(4) 2.38 % 2.26 % Net interest margin(5) 2.75 % 2.70 % Ratio of average interest-earningassets to average interest-bearing liabilities 126.4 129.3     Six Months Ended June 30,2011   2010Average     Avg Yield/Average     Avg Yield/BalanceInterestCostBalanceInterestCost (Dollars in thousands) ASSETS:Interest-earning assets Loans(1)(2) $ 525,946 $ 12,558 4.78 % $ 471,320 $ 12,365 5.25 % Securities(2) 626,009 10,749 3.43 619,580 11,518 3.72 Other investments - at cost 13,982 32 0.46 12,250 12 0.20 Short-term investments(3)   6,327   1   0.03   15,518   3   0.04 Total interest-earning assets 1,172,264   23,340   3.98 1,118,668   23,898   4.27 Total noninterest-earning assets   72,163   80,151   Total assets $ 1,244,427 $ 1,198,819   LIABILITIES AND EQUITY:Interest-bearing liabilities NOW accounts $ 88,596 458 1.03 $ 72,663 459 1.26 Savings accounts 106,715 315 0.59 114,276 455 0.80 Money market accounts 82,069 266 0.65 48,837 179 0.73 Time certificates of deposit   341,661   3,042   1.78   343,865   4,016   2.34 Total interest-bearing deposits 619,041 4,081 579,641 5,109 Short-term borrowings and long-term debt   309,756   3,449   2.23   284,614   3,325   2.34 Interest-bearing liabilities   928,797   7,530   1.62   864,255   8,434   1.95 Noninterest-bearing deposits 86,002 81,440 Other noninterest-bearing liabilities   9,655   8,512 Total noninterest-bearing liabilities   95,657   89,952   Total liabilities 1,024,454 954,207 Total equity   219,973   244,612 Total liabilities and equity $ 1,244,427 $ 1,198,819 Less: Tax-equivalent adjustment(2)   (434 )   (348 ) Net interest and dividend income $ 15,376   $ 15,116   Net interest rate spread(4) 2.36 % 2.32 % Net interest margin(5) 2.73 % 2.79 % Ratio of average interest-earningassets to average interest-bearing liabilities 126.2 129.4   (1) Loans, including non-accrual loans, are net of deferred loan origination costs and unadvanced funds. (2) Securities, loan income and net interest income are presented on a tax-equivalent basis using a tax rate of 34%. The tax-equivalent adjustment isdeducted from tax-equivalent net interest and dividend income to agree to the amount reported on the statements of operations. (3) Short-term investments include federal funds sold. (4) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost ofinterest-bearing liabilities. (5) Net interest margin represents tax-equivalent net interest and dividend income as a percentage of average interest-earning assets. Westfield Financial, Inc.James C. Hagan413-568-1911President & CEOorLeo R. Sagan, Jr.413-568-1911CFO